Challenge to the Government’s revocation of the Domestic State Aid Regime

The Good Law Project (GLP) has instructed Hausfeld to bring a claim for judicial review against the Secretary of State for Business, Energy and Industrial Strategy following the coming into force of the State Aid (Revocations and Amendments) (EU Exit) Regulations 2020 (the State Aid Regulations).

The potential claim revolves around the Government’s decision to use secondary legislation to remove EU state aid rules from the scope of what is known as retained EU law. Hausfeld sent a pre-action protocol letter to the Government setting out GLP’s intention to pursue a judicial review claim and the Government has provided its response. GLP is now considering next steps.

The letter sets out GLP’s position that the Government has acted ultra vires the European Union (Withdrawal) Act 2018 (the Withdrawal Act) in making the State Aid Regulations, and that the Regulations are therefore unlawful. A key focus of the letter is the scope of the so-called Henry VIII powers in section 8 of the Withdrawal Act which are limited to giving the Secretary of State the power to remedy ‘deficiencies’ in retained EU law following Brexit rather than to make fundamental policy changes. The effect of the State Aid Regulations is that, following the end of the transition period on 31 December 2020, the UK currently has no clear domestic subsidy regime in place – an important policy change which GLP argues should only be made through primary legislation and not through the section 8 powers under the Withdrawal Act. On that basis, GLP are seeking to compel the Government to repeal the State Aid Regulations.

This case could have implications on how the Government relies on section 8 powers in other contexts and may lead to an assessment of the increasing use of Henry VIII powers by the Government. The case is also likely to be the first case to consider the Government’s wide powers under the recently passed European Union (Future Relationship) Act 2020. Beyond these key constitutional questions, the case may also have repercussions on the shape of the domestic state regime over the next few months.

Counsel Tim Buley QC and Yaaser Vanderman of Landmark Chambers have been instructed on the matter.